eli5 How do credit card companies make money out of people that pay their cards in full before the billing cycle and still get rewards?

Question

eli5 How do credit card companies make money out of people that pay their cards in full before the billing cycle and still get rewards?

In: 808

Answer 1

They get a percentage of each transaction from the store. There are also yearly fees for a lot of the “fancier” cards. And there are a LOT of people who don’t pay their balance on time, and those interest rates take care of it for everyone else.